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Changes in ECHA fees being considered to generate increased funding

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Changes in ECHA fees being considered to generate increased funding

According to the recent UBA report “Advancing REACH Financing options for ECHA”; it states “there is a significant gap between the revenue from fees and charges for REACH/CLP and expenditure on REACH/CLP activities, staff and buildings. Under all scenarios this gap becomes larger over time with the result that, without intervention to change the existing mechanisms for REACH fees and charges, the EU balancing budget contribution will need to increase over time to fund ECHA’s efforts to deliver REACH political objectives”.

ECHA commissioned a review of charges by UBA and the following alternatives were considered:

  • A new annual charge/fee requirement

  • A new update requirement

  • Implement charges for updates triggered by ECHA evaluation

A new regular annual charge/fee requirement

At present registrants pay a single fee according to tonnage band and SME status. It is being considered to change this to an annual fee to cover the costs of the regulator (ECHA) to undertake its obligations under REACH/CLP. This would mean that a company would pay an annual registration fee for each new and phase-in substance it has registered.

It was also considered that using such a fee could be an incentive to update dossiers. Non-compliance of registration dossiers has been identified as one of the top four most urgent issues. ECHA wants companies to update dossiers regularly but it is thought fees for updating would act as a disincentive, therefore, the following were considered in the report:

  • The possibility of eliminating fees for updates and substituting them with an annual registration renewal fee.

  • Whether one could incentivise certain desirable types of dossier update (e.g. additional (eco)toxicological information) by waiving the annual renewal fee whenever an update is made. (It was thought that this was overly complex).

  • Introduce a concept of ‘dossier certification’ such that once dossiers have been checked and certified as complete and satisfactory by ECHA they would no longer incur an annual fee.

Estimates of annual registration renewal fees are shown in table 3 (page 71) of the report and below, with the possibility of generating €100 million per annum.

               Annual fee per dossier to deliver €100 million per year

   Large  Medium  Small   Micro

1-10t

€ 199

€ 129

€ 70

€ 10

10-100t

€ 535

€ 348

€ 187

€ 27

100-1000t

€ 1,432

€ 931

€ 501

€ 72

>1000t

€ 3,860  

€ 2,509

€ 1,351

€ 193

Intermediate

€ 174

€ 113

€ 61

€ 9

 

 If a fee for updates was eliminated it would reduce ECHA income from this annual fee estimation by €11 million leaving the total income about €89 million. A concern of applying a new   annual fee is that the administrative cost might be as high as the invoices sent out. However, it would be possible, as with registration fees, to invoice automatically via REACH-IT to reduce   costs.

A new update requirement

Update frequencies of 3, 5 and 10 years were considered. The revenue (cost to industry) was estimated on constant flow of updates. If the annual frequency dropped below 10% under the baseline there would be a reduction in future revenue.

The report concluded that updates every three years would generate most revenue but this is relatively modest compared with expenditure from ECHA and contributions from the EU budget.

Implement charges for updates triggered by ECHA evaluation

Another option being considered is connected with the scenarios for extending evaluation to all >1000t substances. This seeks to address the fact that dossier evaluations are intensive and time consuming for ECHA and the cost of this is not recouped by the initial registration fees or current fees charged for updates.

The report proposes on page 74, “For non-compliant dossiers, rather than introduce a totally new system of fees it seems sensible to suggest that an update fee multiplier could be introduced. The simplest way of recouping the costs of evaluation on non-compliant dossiers would seem to be to apply a multiplier to these fees for situations where the non-compliance has been identified by ECHA as opposed to being corrected by an update submitted by a registrant on their own initiative”.

The following is given as an example in the report of the use of a multiplier, “If a large enterprise updated information in the SDS for a substance for which it is the only registrant (individual registrant) it would incur a fee of €3,261. Under a new charging system a multiplier would be applied to the update fee to reflect the costs of ECHA’s evaluation work. If this multiplier were, for example, 5, then the fee due would be €16,305 rather than €3,261. Such an ‘evaluation update charge multiplier’ would encourage registrants to ensure that their dossiers are suitably complete, up to date and conform to the requirements and would appropriately penalise those that do not”.

Summary

There are three main options for ECHA to increase their revenue;

  1. Charging an annual fee for all registrations but it is thought that the administrative cost of this might be as high as the revenue taken

  2. Enforcing updates of dossiers with fees attached every 3, 5 or 10 years. A 3 year update cycle would generate the most revenue but the amount would be small compared to the ECHA budget.

  3. Charging non-compliant dossiers a multiplier to pay for ECHA time in bringing a dossier into compliance. This would encourage applicants to check their dossiers for compliance. This option rewards effort and would offset the costs of evaluation.

ECHA will obviously have to find a way to generate more income as there is a shortfall between current fees and ECHA’s expenditure. The approach that will be adopted to address this shortfall is not yet known but this report gives us an idea of what could be considered.

References

Reference; Advancing REACH financing options for ECHA by Anthony Footitt and Daniel Venkovsky; December 2018. (TEXTE 118/2019)

Image; Copyright European Chemicals Agency.

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